UPDATE 1-Recession-battered Greece scores yet more record unemployment

Thu Sep 12, 2013 6:13am EDT

* June jobless rate climbs to 27.9 pct, up from 24.6 in June 2012

* Youth jobless rate at 58.8 pct

ATHENS, Sept 12 (Reuters) - Greece's jobless rate hit a record high of 27.9 percent in June, data showed on Thursday, as the labour market continued to buckle in a deep recession with austerity policies linked to the country's bailout.

Unemployment rose from 27.6 percent in May, and was more than twice the average rate in the euro zone of 12.1 percent in July. The latest reading was the highest since Greek statistics service ELSTAT began publishing monthly jobless data in 2006.

Such data, however, tends to lag other growth indicators, which Eurobank economist Platon Monokroussos said were painting a slightly less bleak picture.

"Recent data for the annual change in employment and new private sector hirings suggest the jobless rate may be approaching a cyclical peak," he said.

The government has also suggested that there are tentative signs of Greece having hit bottom.

Prime Minister Antonis Samaras said last week he believed the 2013 slump would be smaller than forecast and economic pain would ease next year.

Financial daily Naftemporiki reported on Thursday that the finance ministry is now looking at a 3.8 percent contraction this year versus the 4.2 percent forecast by international lenders.

The unemployment rate, meanwhile, has more than tripled since 2008, the start of a six-year recession which has wiped out about a quarter of Greece's economy.

Joblessness is a major headache for the government as it scrambles to hit fiscal targets and carry out structural reforms demanded by its international creditors.

Monokroussos said temporary hirings in the tourism sector and recently initiated short-term public works programmes were likely to provide support for employment over the second half.

Tourism, which accounts for about a fifth of Greece's economic output and one in five jobs is having a bumper season. Revenues are seen rising 10 percent in 2013, to 11 billion euros, with more than 17 million visitors - a record - expected.

But correcting Greece's economic imbalances has come at a very high cost. Data showed those aged 15 to 24 remained the hardest-hit as the jobless rate in this age group, excluding students and military conscripts, registered 58.8 percent.

With the economy in its sixth straight year of recession and 1.4 million people officially without jobs, the pain is felt across the board with borrowers falling behind on loans and fewer workers paying into state pension funds.

A turnaround will take time to be felt in the labour market even if recovery sets in next year as authorities project. The central bank sees unemployment peaking at 28 percent before it starts to decline in 2015.

The European Union and the IMF, which bankroll Greece, expect unemployment will average out at 27 percent this year and ease to 26 percent in 2014. Greece's largest private sector labour union GSEE has a more grim outlook, expecting it to climb to 29-30 percent this year and hit 31.5 percent in 2014.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

Italy shares ECB worries on deficit, working to avoid overshoot - minister

ROME, Sept 12 | Thu Sep 12, 2013 6:16am EDT

ROME, Sept 12 (Reuters) - Italy's government shares the concerns of the European Central Bank about the country's budget deficit trend and is working to prevent the deficit overshooting the EU's ceiling of 3 percent of output, Welfare Minister Enrico Giovannini said on Thursday.

Italy's fiscal gap at the end of August was almost twice as high as in the same period of 2012, and in its monthly bulletin on Thursday the ECB warned of "increasing risks" that Italy will miss its 2013 target of a deficit-to-GDP ratio of 2.9 percent.

"The risks are very clear to the government," Giovannini told reporters in Rome. "It's a concern that the ECB shares with the government and the country, and that is why safeguards have been introduced on 2013 and there is close monitoring by the Treasury."

Giovannini also said that data on Thursday showing an unexpected drop in industrial output for July did not change the government's expectation that Italy's long recession would bottom out in the third or the fourth quarter.

18.12 | 0 komentar | Read More

UPDATE 2-Details of Italian BTP and CCTeu auction

• Tweet
• Share this
• Email
• Print

Thu Sep 12, 2013 6:34am EDT

  MILAN, Sept 12 (Reuters) - Italy's Treasury sold a total of  7.5 billion euros in bonds on Thursday.           1ST TRANCHE OF BTP BOND MATURING NOV. 15, 2016                          12/09/13              11/07/13 *    Gross yield            2.72  **               2.33     Assigned price       100.16                  99.80     Offered                3.0-4.0 bln            3.0-3.5 bln   Total bids             6.072 bln              4.542 bln    Assigned               4.000 bln              3.385 bln    Bid-to-cover ratio     1.52                   1.34         (*) Compares with 7th tranche of BTP bond maturing May 15, 2016.  (**) Highest auction yield since October 2012.     8TH TRANCHE OF BTP BOND MATURING SEPT. 1, 2028                        12/09/13              13/06/13 *    Gross yield            4.88  **               2.33     Assigned price        99.21                 101.40     Offered                1.0-1.5 bln            1.0-1.5 bln   Total bids             2.038 bln              2.596 bln    Assigned               1.500 bln              1.500 bln    Bid-to-cover ratio     1.36                   1.73         (*) Compares with previous tranche of same bond.  (**) Highest auction yield since March 2013.        Details of the auction can be found on page              7TH TRANCHE OF FLOATING-RATE CCTEU BOND MATURING NOV. 1, 2018                        12/09/13              11/07/13     Gross yield            2.56                   2.68     Assigned price        97.91                  97.26     Offered  *             1.0-2.0 bln            1.0-1.5 bln   Total bids             1.943 bln              2.554 bln    Assigned               1.255 bln              1.500 bln    Bid-to-cover ratio     1.55                   1.70            17TH TRANCHE OF OFF-THE-RUN CCTEU BOND MATURING APRIL 15, 2018                        12/09/13                            Gross yield            2.48                            Assigned price        95.00                            Offered  *             1.0-2.0 bln                         Total bids             1.536 bln                          Assigned               0.745 bln                          Bid-to-cover ratio     2.06                                      (*) The Treasury offered to sell 1.0-2.0 billion euros of the  two CCTeu bonds.        Details of the auction can be found on page  

• Tweet this
• Link this
• Share this
• Digg this
• Email
• Reprints

Comments (0)

Be the first to comment on reuters.com.

Add yours using the box above.

18.12 | 0 komentar | Read More

REFILE-Italy yield premium rises further above Spain

Wed Sep 11, 2013 6:03am EDT

* Italian lawmakers delay showdown over Berlusconi

* German yields flirt near 1-1/2 year highs

* Germany to sell 5 billion euros of 10-year Bunds

By Emelia Sithole-Matarise

LONDON, Sept 11 (Reuters) - Italy's 10-year yield premium rose further above that of Spain on Wednesday as investors fretted about the future of Rome's fragile ruling coalition and plans by the country to issue more debt this year.

Lawmakers held fire on Tuesday on a vote on whether to expel Silvio Berlusconi from the Senate following his conviction for tax fraud after allies of the former premier threatened to topple the government. Debate resumes on Thursday.

Concern about the survival of Rome's government has weighed on Italian bonds, pushing their 10-year yields above those of Spain for the first time in 18 months.

Italian 10-year yields were unchanged on the day at 4.55 percent while Spanish equivalents were down 1 basis point at 4.52 percent, widening the spread to 3 bps from 1 basis point in late Tuesday trade.

The Italian Treasury has asked to raise the ceiling on this year's net debt issuance by 18 billion to 98 billion euros, highlighting the difficulty Rome is having in reining in the public finances and putting more pressure on it to float good volumes at upcoming auctions.

The higher issuance will lift Italy's massive public debt, already targeted at 130 percent of output this year, the second highest in the euro zone after Greece.

In contrast, Spain is reducing the size of its auctions for the rest of the year, after frontloading most debt sales earlier this year to take advantage of benign market conditions for lower-rated debt.

"They postponed the vote but it does not change anything much. As long as the situation with Berlusconi isn't cleared out and the political threat to the government remains you shouldn't expect Italy to reverse its underperformance of Spain," KBC strategist Mathias van der Jeugt said.

ITALY AUCTION TEST

Some in the market expected the gap with Spain to widen further ahead of a sale on Thursday of up to 7.5 billion euros of Italian debt, although demand from Italy's huge domestic financial sector should support the auction.

In core bonds, German 10-year yields dipped, with the market taking a breather after Tuesday's selloff. They were still near 1-1/2 year highs before the sale of new 10-year bonds later in the session.

Some in the market said the auction could be weakened by a reduction in the chances of a near-term military strike on Syria, which has cooled demand for low-risk debt.

Last week an auction of 5-year German debt drew softer demand than at a previous sale in August as improving euro zone and U.S. economic data and expectations the U.S. Federal Reserve would go ahead with a cutback in its monetary stimulus soured investor appetite for top-rated bonds.

"The higher yield might attract some extra demand but I think it will be a relatively tough auction given the economic backdrop," one trader said, "Average demand at previous Bund sales this year have been around 1.5 so we might see it come below this."

Bund futures were 14 ticks up at 136.87 with cash 10-year yields 1.3 bps lower at 2.03 percent, within sight of the 2.059 percent hits last week.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

UPDATE 1-EU's Barroso urges Europe to complete banking union

Wed Sep 11, 2013 6:12am EDT

* European Commission chief urges faster action on banking union

* Barroso says investors still lack confidence in euro zone

* "We are all in the same boat", says Barroso

By Claire Davenport

STRASBOURG, France, Sept 11 (Reuters) - European Commission President Jose Manuel Barroso declared on Wednesday that economic recovery was within sight after nearly four years of Europe's debt crisis and urged governments to move faster to complete a stalled banking union.

In his last State of the Union speech before European Parliament elections next May, Barroso offered no new policy proposals but appealed to member states to redouble efforts to quell financial turmoil that has led to a drawn-out recession and soaring unemployment.

"What we can and must do first and foremost is deliver the banking union. It is the first and most urgent way to complete our union," he told lawmakers in Strasbourg.

His comments were an implicit challenge to Germany, the EU's leading power, which has worked to limit the scope of a single banking supervisor and slow the drive for a single bank resolution authority and fund, citing legal constraints and the wish to spare its taxpayers from liabilities for others' banks.

The goal of creating a single framework and backstop for around 8,000 European banks, with mechanisms to wind down failed lenders and protect savers' deposits, is one of the EU's most ambitious and challenging projects.

EU officials and many financial market economists say it is crucial to strengthen a banking system shaken by the crisis and open the way for lending again to spur growth. But efforts to implement it have stalled in the run-up to German elections on Sept. 22, and there are doubts about whether Berlin will add impetus to the project even after a new government is in place.

"Make no mistake, there is no way back to business as usual," Barroso said.

"Some people believe that after this everything will go back to the way it was before. They are wrong. We will not go back to the 'old' normal, we have to shape a 'new' normal."

Barroso will finish his second five-year term as Commission president in November next year and is not expected to be re-appointed, so there was a strong dose of legacy in this address.

The centre-right former Portuguese premier launched a strong defence of Europe's crisis management ahead of pan-European elections that are expected to bring a surge in anti-EU votes, potentially shifting the balance of power in Brussels.

It was governments' fiscal mismanagement and financial market excesses - not EU policies - that had caused the crisis, he said, decrying a tendency for successes to be "nationalised" and failures "Europeanised". Europe should not be cast as the enemy, he said.

He also urged leaders not to slacken in overhauling their economies and to introduce the structural reforms needed to put the euro zone and wider EU on a more stable footing.

"The recovery is within sight. This should push us to keep up our efforts," Barroso said in an hour-long address that received lukewarm responses from political opponents. "We owe it to our 26 million unemployed."

The biggest risk to a sustained recovery, he said, was political - a lack of commitment by leaders towards the goals agreed among them over the past three years.

ALL IN THE SAME BOAT

In what might be perceived as another veiled criticism of Germany, Barroso said all 17 euro zone countries were in the same boat. While several - Greece, Portugal, Ireland and Cyprus among them - have required bailouts, that did not mean the rest had no work to do or couldn't help.

"When you are in the same boat, one cannot say: 'your end of the boat is sinking'. We were in the same boat when things went well and we are in it together when things are difficult," he said.

"There is a direct link between one country's loans and another country's banks, between one country's investments and another country's business, between one country's workers and another country's companies.

"This kind of interdependence means only European solutions can work."

The greatest concern for Barroso and other top policymakers is that the appetite for reform is waning as pressure from financial markets tapers off and a recovery begins.

A lot of the calm in markets over the past six months is due to the announcement last year by European Central Bank President Mario Draghi that he will do "whatever it takes" to protect the euro and ensure the monetary union holds together.

But the ECB's commitment has to be backed by reforms by the euro zone, whether adjustments to the pension system in France, lowering labour costs in Spain and Italy or spurring consumption in Germany.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

UPDATE 1-Political woes push Italy's debt costs to nine-month high

Wed Sep 11, 2013 6:31am EDT

* One-year yields at auction hit highest since Dec 2012

* Offers up to 7.5 bln euros in longer-dated bonds on Thursday

* Government's survival at stake over Berlusconi's future

By Valentina Za

MILAN, Sept 11 (Reuters) - The threat of a political crisis pushed Italy's funding costs higher at an auction on Wednesday, with the world's fourth-largest debtor paying more to borrow over one year than it has since December 2012.

Fears the governing coalition will not survive if former prime minister Silvio Berlusconi is expelled from the Senate following a tax fraud conviction have already hit Italian bonds trading in the secondary market.

On Wednesday, the Treasury paid 1.34 percent to sell 8.5 billion euros in one-year bills, up from 1.05 percent at a similar sale a month ago. Demand totalled 1.4 times that amount, slightly down from 1.5 times at the previous auction in August.

"Italian yields remain at acceptable levels," said ING rate strategist Alessandro Giansanti. "But it is clear that the market doesn't like the domestic political tensions."

Analysts say the higher yields encourage domestic demand, helping the Treasury meet its pressing funding needs. About two-thirds of Italy's 2 trillion euro debt is held domestically.

But an auction of longer-term bonds on Thursday for up to 7.5 billion euros will test appetite for Italian paper among international investors.

The bond sale will take place shortly before lawmakers resume a debate on centre-right leader Berlusconi's political future.

The issue threatens the survival of Italy's fragile left-right coalition. Supporters of the former premier have threatened to pull out of Prime Minister's Enrico Letta's government if he loses his seat.

A meeting of the Senate committee charged with the decision ended without holding a vote on Tuesday, easing tensions in the immediate. Hearings resume on Thursday at 1300 GMT.

Analysts see early elections as unlikely but say a government reshuffle is possible. It would come at a time when Italy is due to draft next year's budget, seeking to contain a public debt already projected to exceed 130 percent of output.

In a move set to further swell the debt, Italy plans to up the ceiling on 2013 net debt issuance by more than a fifth to 98 billion euros, a Senate panel said on Tuesday.

Domestic political woes and supply pressure have reduced the appeal of Italian bonds compared to Spanish ones. On Tuesday the yields on Italian 10-year bonds rose above those of Spain for the first time since March 2012.

On Wednesday, Italy also sold 3.0 billion euros of one-off bills maturing in late December at an average 0.51 percent yield. The smaller sale was covered 2.3 times as investors sought to park year-end liquidity.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

UPDATE 1-IMF chief says bank union needs to be completed quickly

Tue Sep 10, 2013 5:33am EDT

* Lagarde says monetary policy alone cannot solve crisis

* France's Moscovici urges roadmap toward federal budget

PARIS, Sept 10 (Reuters) - International Monetary Fund chief Christine Lagarde urged euro zone governments on Tuesday to make quick progress on their proposed banking union, to put the bloc's crisis definitively behind it.

European efforts to construct a joint backstop for the region are stumbling ahead, with France and Germany split on key pillars of the system, which is supposed to rebuild confidence in the euro zone's banks.

"We very much think of the euro area as a beautiful ship that has been built, nurtured .. for the soft seas, but which is not yet completely finished for the rough ones," Lagarde said at a conference in Paris.

"A lot has been done in relation to banking union. If I have a message today it is that that particular part of the ship needs to be finished, needs to be completed and speed is of the essence."

She said governments could not count exclusively on the easy monetary policy of the European Central Bank to stabilise the euro zone's debt crisis and that the foundations of better governance, of which banking union is a part, were vital.

Speaking at the same conference focused on budgetary union in Europe, French Finance Minister Pierre Moscovici said France wanted a roadmap towards the creation of a federal euro zone budget over the medium term.

He said such a budget could be used to jointly finance unemployment insurance schemes and could be paid for using a variety of national or joint euro zone sources.

"We can consider using social charges, corporate or sales tax or levies on financial transactions, or a joint carbon emissions tax," he said.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

UPDATE 1-Greece says primary budget surplus means it on track to hit EU-IMF targets

Tue Sep 10, 2013 5:39am EDT

* Greek primary budget surplus in Jan-Aug at 2.92 billion

* euros

* Athens says on track to meet fiscal targets

* EU aid, investment freeze account for most of the surplus

By Harry Papachristou and Lefteris Papadimas

ATHENS, Sept 10 (Reuters) - Greece said on Tuesday its budget was in surplus, not counting interest payments, and that it was on course to hit fiscal targets and fulfill conditions to seek additional debt relief from its international lenders.

The central government had a primary budget surplus of 2.92 billion euros ($3.87 billion) between January and August, the finance ministry said.

It compares with an interim target for a deficit of 2.5 billion euros in the period, it said.

Reaching a primary surplus this year is the main goal of the debt-laden country's government. Hitting that target would trigger a clause in its international bailout allowing Athens to seek additional debt relief from its lenders.

The reading announced on Tuesday, however, provides just an approximate indication of how Greece's finances are shaping up.

It is not directly comparable with its bailout targets as it excludes the budgets of local government and social security funds and includes one-off revenue from euro zone central banks.

It is also on a cash basis, whereas the budget figures against which Greece's performance will be judged are based on an accrual basis, which classifies revenues and expenses differently.

But Deputy Finance Minister Christos Staikouras said he was confident Greece would be in the black at the end of the year. "The target to reach a surplus at the end of the year becomes more and more feasible," he said.

Austerity has helped Greece cut its primary deficit by 9.2 percent of gross domestic product in 2010-2012, one of the largest fiscal improvements recorded worldwide.

It has come at a cost of huge unemployment and a deep economic recession-cum-depression, now in its sixth year.

But the country's lenders say Athens still risks missing its future targets, as austerity-hurt households might prove unable to cope with a planned tax onslaught in the coming months.

To compensate for a 713 million euro shortfall in tax revenues in the first eight months of the year, Greece cashed in more European Union subsidies than scheduled. It also spent far less on public investment and on tax refunds than planned.

Such factors account for about half of the 5.5 billion euro target overshoot recorded, the figures showed.

The figures also include about 1.5 billion euros in one-off revenue from euro zone central banks. This money derives from profits which the central banks earned from Greek government bonds they held and which they returned to Athens under the terms of its international bailout.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

RPT-Fitch: Pension change looks neutral for Polish sovereign

Tue Sep 10, 2013 6:30am EDT

(Repeat for additional subscribers)

Sept 10 (Reuters) - (The following statement was released by the rating agency)

Polish pension reforms announced last week look broadly neutral for the sovereign's credit profile, assuming the authorities adjust public debt limits to take account of the fall in the public debt ratio that will result, Fitch Ratings says. The initial favourable impact on the headline public debt ratio may be offset by the reduction in the stock of assets to meet future pension provisions and a consequent increase in long-term state liabilities.

Potential challenges in the Constitutional Court leave the reforms subject to legal uncertainty. The long-term impact depends on many factors, not least interaction with previous reforms, such as the May 2012 pensions bill. Our full assessment of the changes to open pension fund (OFE) legislation will depend on the final, detailed proposals and accompanying legislation, and on any impact on sovereign funding conditions.

Transferring PLN120bn (US37bn) of sovereign debt held by OFEs to the social security board (ZUS) and cancelling it would narrow the gap between Poland's public deficit and debt and the 'A' category median. Debt to GDP could fall by 7-8pp from around 53% on the national methodology at end-2012 and annual deficits narrow by close to 1pp, depending on the number of people who choose to keep part of their future pension contributions in OFEs or opt for all their future contributions to go to ZUS (the government has proposed that existing participants be given three months to choose).

However, while pending OFE reform has complicated fiscal forecasting, the authorities' ability to deliver a durable improvement in public finance sustainability has remained a key element of our ratings assessment. The government has indicated that it will lower both its first (50%) and second (55%) legal public debt thresholds by an amount equivalent to the drop in gross general government debt to GDP that the transfer achieves. Limiting the additional fiscal space the reduction in debt to GDP might have created as the sovereign approached the 55% threshold should reduce scope for pronounced fiscal loosening that might endanger medium-term consolidation, one of our potential triggers for a negative rating action.

Keeping this commitment and implementing the new and more comprehensive structural public spending rule, which would tie spending to GDP growth, would be important to limit further deterioration to fiscal credibility after recent fiscal slippage and the suspension of the 50% debt threshold. It would also counter objections from some observers that the pension overhaul was motivated by populist pressures to loosen underlying spending. Such measures are particularly important in underpinning consolidation, as political appetite for stronger deficit reduction will be tested ahead of elections in 2014-2015. Any impact on Poland's sovereign bond market remains unclear. OFEs will be prohibited from buying Treasury securities, and the removal of a large chunk of T-bonds could affect market depth, although we do not think this would have a direct impact on Poland's ability to fund itself, partly because of lower funding needs. The proportion of government bonds held by non-resident investors would rise to 45% from 36%, but Poland has not given any indication of being at high risk of capital flight despite recent financial market volatility prompted by Fed tapering concerns.

We revised the Outlook on Poland's 'A-' rating to Stable from Positive in August, reflecting fiscal slippage (mainly due to weaker growth) and the damage to fiscal credibility from the suspension of the first legal public debt threshold.

The government announced last week that Treasury Securities, state-guaranteed bonds and other non-equity assets will be transferred from OFEs to ZUS, and future contribution to OFEs will become voluntary. Remaining OFE assets will transfer gradually to ZUS in the 10 years before an individual reaches the pension age. While this will reduce the cost of funding the shortfall in ZUS contributions, it will increase the government's future unfunded pension liabilities, which are also a factor in our analysis.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More

RPT-Mexican tax reform to avoid sales tax on food, medicine-officials

Sat Sep 7, 2013 11:53pm EDT

MEXICO CITY, Sept 7 (Reuters) - The Mexican government has decided against levying a controversial sales tax on food and medicine as part of a key fiscal reform it will present on Sunday, officials in the ruling Institutional Revolutionary Party, or PRI, said on Saturday.

The government is aiming to boost Mexico's weak tax revenues by around 4 percentage points of gross domestic product (GDP), and was seriously considering widening the application of value added tax (VAT) to include food and medicines.

This was viewed as a risky measure politically though because of the impact it would have on the poor, who make up roughly half of the population in Latin America's No. 2 economy.

The economy suffered a surprise contraction in the second quarter, prompting fears higher taxes would drag on an eventual recovery.

Recent street protests over other reforms aiming to open up the oil industry to foreign capital and overhaul a failing education system undertaken by President Enrique Pena Nieto have stirred fears of social unrest in Mexico, prompting a more cautious approach.

Earlier on Saturday, Finance Minister Luis Videgaray briefed some PRI members of Congress on the planned fiscal reform.

Afterwards several PRI officials, speaking on condition of anonymity, told Reuters that the government had decided to opt against levying VAT on food and medicine.

Economists say broadening the application of VAT would be one of the most effective ways of raising tax revenues, and the PRI in March changed its manifesto to end the party's longstanding ban on imposing the levy on food and medicine.

The government has never said explicitly it would apply VAT to food and medicines but had not ruled it out either.

• Link this
• Share this
• Digg this
• Email
• Reprints

18.12 | 0 komentar | Read More